Hyundai Motor Boosts 2009 China Sales Goal on Tax cut (Update2)

Hyundai Motor Co. boosted its 2009 China sales forecast by more than 11 percent as tax cuts spur demand for small cars in its third biggest market.

South Korea’s biggest automaker now expects to sell more than 400,000 vehicles in China compared with an earlier prediction of 360,000, Noh Jae Man, Beijing Hyundai Motor Co. president, said in an interview today at the Shanghai motor show.

General Motors Corp., the largest overseas automaker in China, has also raised its sales forecast as the government cuts taxes and hands out subsidies to revive flagging auto demand. Seoul-based Hyundai boosted China sales 49 percent in the first three months of the year.

“Fortune is smiling upon Hyundai now,” said Sohn Myung Woo, a Seoul-based analyst at KB Investment & Securities Co. The carmaker is benefiting from “a weak local currency and the Chinese government’s incentives on small cars — a Hyundai strength.”

China cut the sales taxes on cars with engines of 1.6 liters or less in January to revive demand after auto sales rose at the slowest pace in a decade last year. Four of the six models that Beijing Hyundai makes qualify for the incentive, including the Elantra, Elantra Yuedong and Accent small cars.

Hyundai on Feb. 1 said it aimed to boost sales at its Chinese venture by 22 percent this year. Sales in China accounted for 11 percent of Hyundai’s global sales last year. That only lagged behind South Korea’s 21 percent share and the 14 percent sold in the U.S.

GM expects China industrywide sales to rise as much as 10 percent this year, compared with an earlier forecast for an increase of less than 3 percent, it said last month. The automaker expects its own growth to outperform the market by as much as 3 percentage points.
Sourced via bloomberg.com